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Stock Market Timing Television – 04262023

Good morning everyone. Welcome to Wednesday morning. It’s Stephen Whiteside here from in the pre market this morning, stock index futures are above fair value. So so far it looks like we’re gonna see a little buying at the Open on Wednesday morning and most of that buying is going to be in the tech sector. Now Tuesday finally gave us a buy signal for the VIX and sell signals for all the major indices including the S&P 500, the Nasdaq 100 and the TSX 60.

Now what worked and what didn’t work on Tuesday? Well looking at the major sectors you can see on the TSX there was only one winner and that was utilities up a little over a quarter of a percent. While energy stocks were the biggest losers in the US market, there were no winners and materials were the biggest losers on Tuesday. Now there’s lots of stocks in the news this morning, a lot of earnings out for companies that we follow on a regular basis. There’s one that I want to talk about and that’s Activision.

It was supposed to be taken over by Microsoft and it doesn’t look like that’s going to happen. The UK regulatory body has said no. And so now Activision is down about 10% in the pre market. Now if you go back in time, the deal started way back here back at the start of 2022. If I had owned this stock back then, I would have taken the money and run.

Now I actually took Activision out of the database for the longest time and put it back recently. I am not going to sit around and wait for a better offer. I’m not going to sit around and wait for somebody else to put an offer on the table. That usually doesn’t happen. And what often happens is what’s happening right now is deals don’t go through.

So I’m not going to sit for over a year with my money in Activision waiting to see if there’s a better deal on the table. And as you can see we were recently trading back up to the high we saw back at the start of all this and so now we’re trading down this morning. So this would have been dead money this whole time. You would have had no mathematical advantage to holding this stock for all this period of time. There are lots of other things to do with your money than just sit and hold and wait for the deal to finally go through.

Now Microsoft, which was down yesterday, it’s been down the last couple of days, is trading higher in the pre market and that’s one of the reasons that Nasdaq futures contract is trading up this morning. So it looks like Microsoft may end the day on a buy signal. Of course we’ll have to wait for the end of the day to see how things settle down. Now there was a lot of volatility on Tuesday you saw the VIX was higher, you saw the major indices are all back on sell signals. We had a spike in the US dollar index.

It’s not back on a buy signal just yet, but you can see that money went back into the bond market. There’s the 30 year bond back on a buy signal. Bond yields were down sharply yesterday, so you can see money moving around outside of the stock market. Now, gold was up yesterday, it ended the day just above $2,000, so that’s a good sign. Silver was down yesterday, it’s back on a sell signal.

As of Tuesday’s close. Gold miners were up yesterday. The GDX was up to the lower channel line. We saw some more strength in the Canadian market where we traded up into the Channel. So for the XGD.TO, we’re looking for a close on Wednesday above $20.35.

Now, speaking of miners, we saw a big sell off in copper yesterday, so that’s not a good sign for the global economy. Crude oil was down yesterday. Natural gas was down, not enough to give us a new sell signal. And so there’s the energy stocks in the US, they were down. This particular ETF was down 1.88%, while in Canada we were down 1.94%.

Now, financials were down across the board on Tuesday, we’ve got the XLF back on a sell signal. That has a lot to do with First Republic. Remember, First Republic is one of those regional banks. It was the big winner on Monday, up 20%, and on Tuesday it was down nearly 50%. It’s down again in the pre market.

We closed at 8.10 yesterday, it’s down around $7. Nobody watching these videos should be involved in any regional bank. They’re one breath away from zero and you never want to have your money in anything that’s one breath away from being valued at zero. It’s just not worth the risk. Yeah, you could have been up 20% on Monday, then you’re down 50% on Tuesday, you’re going to be down another 30% on Wednesday.

It’s just not worth it. And it’s very hard to short these stocks. It’s hard to find for your broker to find shares to short at this particular point. We always talk about shorting off the top of the panic zones and we’re very far away from the top of the panic zones. So we’ve got US banks back on a sell signal.

You can compare the financial ETF to banks themselves. The banks got back on a buy signal and now we’re back on a sell signal. No upward momentum. And that, of course, is certainly true for the regional banks. Then looking at broker dealers, we’re back on a sell signal.

US insurance companies back on a sell signal as of Tuesday’s close. Now, looking at Canadian financials, they’re also back on a sell signal. Canadian banks also back on a sell signal. We’re being led lower by the CIBC. Second day of a sell signal there.

And the TD bank is finally back on a sell signal. So if you’ve been waiting to short the TD bank, this is your opportunity. You can short it on Wednesday morning if you want. And then, of course, you would cover that short if we closed above 82 65 on Wednesday. Let’s finish off this morning’s presentation with a couple of comments.

We’ve been pounding the recession drum for quite a while, and that hasn’t stopped the major indices from moving up. We’ve had a nice rally since the low in March. A couple of comments here. You can look back and see where we peaked back at the start of the year, and we just put in a lower high, which is a bearish sign, of course. Now, we’ve often mentioned the fact that this rally has been led higher by a handful of big cap stocks, and the rest of the market has not really participated.

And so when we talk about the rest of the market, we could talk about the Russell 2000 or we could talk about those micro cap stocks. Neither really participated in this rally. Yes, they got off the floor, but they really didn’t get very far. And so that is the overall market and that’s kind of a bearish sign. So now what we’re going to be looking for, does the Russell 2000, do the micro cap stocks, do they hold the low from March, or do they start to break the low from March?

That’ll be the next thing that we’re looking for. Now in the pre market this morning, stock index futures are higher. They’re being led higher by a handful of tech stocks. And we’ll have to see how that holds up throughout the day. And of course, we’ll be looking to see how the market closes to see what we do next.

Okay, folks, thank you very much for your time and attention. Have a great day. Next time you’ll hear my voice is on Thursday morning.

Stephen Whiteside

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